Nine Ways Your Client’s Plan Could Breed Conflict

Friction between family members can escalate during a scorching summer heatwave. Likewise, a flawed estate plan has the potential to breed conflict, mistrust, and financial turmoil among your client’s beneficiaries in several ways.

Lack of a plan. If your client fails to create an estate plan altogether, it can lead to significant disputes and confusion among their family members. Without clear instructions, loved ones could argue over what the client’s intentions were, and state laws will dictate the distribution of accounts and property in a manner that could be inconsistent with your client’s wishes. This can result in some individuals feeling left out or receiving less than they anticipated.

Vague or generic plan. If your client’s estate plan lacks specificity or fails to address important questions, it can open the door for interpretation and disagreement among your client’s beneficiaries. Detailed instructions and provisions in the plan can help prevent disputes and provide clarity as to how your client prefers different situations to be handled. Without clear instructions, disputes may arise regarding distribution of the client’s accounts and property, guardianship of minor children, or your client’s intentions. This uncertainty can lead to protracted legal battles, strained relationships, and irreparable family rifts.

Outdated plan. Circumstances change over time, and your client’s plan may no longer align with their current wishes or family situation. For example, if a beneficiary named in the plan predeceases your client, it is crucial to have contingencies in place. Financial institutions may also be hesitant to accept outdated estate planning documents such as a financial power of attorney. Regularly reviewing and updating the estate plan helps ensure its relevance and effectiveness.

Unequal treatment of beneficiaries. While your client has the right to distribute their money and property as they see fit and in the manner they think best, treating beneficiaries unequally can create tension and hurt feelings among family members. Open communication and discussing the reasoning behind such decisions ahead of time can alleviate stress, help manage expectations, and minimize conflicts.

Unclear wishes regarding care and decision-making. Apart from money and property, your client’s plan should also address their wishes for medical and financial decision-making if they become incapacitated. If your client fails to provide clear instructions, it can lead to disagreements among family members who may have different opinions about the client’s care. To prevent conflicts, it is important that your client appoint reliable decision-makers and clearly communicate their wishes.

Conflicting decision-makers. Conflicts may arise when multiple individuals, such as children, are given priority to serve as decision-makers. Each person may have different philosophies or opinions about the client’s care, leading to disagreements and potential disputes. It is crucial to consider these dynamics and select decision-makers who can work together harmoniously.

Unexpected tax consequences. Inadequate estate planning can lead to significant tax liabilities that may deplete the wealth your client intended to pass on to their loved ones or favorite organizations. By leveraging effective tax planning strategies such as trusts or gifting, your client can potentially minimize estate taxes and maximize the financial legacy they leave behind.

Business succession issues. If your client owns a family business, a lack of succession planning can be particularly detrimental. Without a well-defined plan, conflicts may arise regarding leadership, ownership, and the future direction of the business. This can jeopardize the continuity of the enterprise and strain relationships among family members involved in the business.

Emotional toll on loved ones. A poorly crafted or outdated estate plan can place an immense emotional burden on your client’s loved ones during an already challenging time. Without clear guidance, your client’s family members may be left guessing their wishes, resulting in anxiety, resentment, and fractured familial bonds. By proactively addressing potential conflicts in your client’s estate plan, you can help your client alleviate potential emotional strain on their beneficiaries and foster a sense of unity.

To mitigate these potential conflicts, it is advisable for your client to consult with an experienced estate planning attorney to create a comprehensive and up-to-date plan. Regularly reviewing and updating the plan as circumstances change can help ensure that their intentions are clearly communicated, reducing the likelihood of conflicts among their loved ones and protecting their legacy.